Reeves' ISA review

subjecttocontract

jimjames said:

Ocelot said:

clairec666 said:

Kim_13 said:

Ruling out cutting the overall £20,000 limit was a silly thing to do, and cutting it anyway would be no big deal - it wasn’t a manifesto commitment to my knowledge. A £20,000 ISA allowance against a £12,570 personal allowance is madness and cutting it would be better than restricting personal choice - and raise more revenue in the process.

If you're putting £20000 into an ISA each year then you're hardly struggling for money, yet by keeping the personal allowance frozen those at the lower end of the pay scale are losing a higher proportion of their income to tax. If Labour stuck to their original ethos, they would be slashing that ISA limit and raising the personal allowance in order to help out lower paid workers. There would be grumbles, but they'd soon go away. It's not as if they're raiding our existing ISAs and taxing us on their contents, they would just be limiting how much we put in. £5000 seems reasonable in my opinion.

I don 't know about you, but my 20k per year isn't 'new' money, it's money recycled from  taxable accounts.

And that shows the benefit to the Treasury. If it remains in taxable accounts it may increase their receipts

Well surely if the money remains in taxable accounts the Treasury receipts will be exactly the same as they are now.

Kim_13

subjecttocontract said:

jimjames said:

Ocelot said:

clairec666 said:

Kim_13 said:

Ruling out cutting the overall £20,000 limit was a silly thing to do, and cutting it anyway would be no big deal - it wasn’t a manifesto commitment to my knowledge. A £20,000 ISA allowance against a £12,570 personal allowance is madness and cutting it would be better than restricting personal choice - and raise more revenue in the process.

If you're putting £20000 into an ISA each year then you're hardly struggling for money, yet by keeping the personal allowance frozen those at the lower end of the pay scale are losing a higher proportion of their income to tax. If Labour stuck to their original ethos, they would be slashing that ISA limit and raising the personal allowance in order to help out lower paid workers. There would be grumbles, but they'd soon go away. It's not as if they're raiding our existing ISAs and taxing us on their contents, they would just be limiting how much we put in. £5000 seems reasonable in my opinion.

I don 't know about you, but my 20k per year isn't 'new' money, it's money recycled from  taxable accounts.

And that shows the benefit to the Treasury. If it remains in taxable accounts it may increase their receipts

Well surely if the money remains in taxable accounts the Treasury receipts will be exactly the same as they are now.

Anyone with a significant sum in taxable accounts (be it redundancy, house sale, inheritance, life savings) that they don’t wish to invest for whatever reason is surely earmarked to be moved into Cash ISAs as quickly as possible. Reducing the rate at which that can happen will increase tax receipts.

Alexland

subjecttocontract said:

If the amount that can go into a cash isa is reduced, I won't be paying more into a S&S isa that's for sure. I'll probably just put it in a fixed rate bond and pay tax on it.......which is most probably where the money already is. I'm in my seventies and dont want any more invested in S&S. I suspect there are many hundreds of thousands with the same idea.

There are extremely low risk investments such as money market funds or short dated gilts available in some S&S accounts. On some eg Dodl it's even possible to get a good rate on a S&S ISA cash balance without making any investment.

Alpine_Star

Today's FT.

Alexland

Alpine_Star said:

Today's FT.

It's hard not to get political but such ideas are beyond hopeless at addressing the national issues we face.

As long as she keeps giving me a grand a year in my S&S LISA to help with my kids house deposits when I am 60 (that seemed a long way away when I opened it) then I'll not say any more.

wmb194

Alpine_Star said:

Today's FT.

Excluding Isas from stamp duty (SDRT) would be good. Rather than pay 0.5% SDRT, where the exchange rate and fees make sense e.g., Trading212 with its 0.15% FX fee and no commission I've been buying shares in companies otherwise listed in London - such as Shell, BP and Unilever - in New York and Amsterdam.

wmb194

Alexland said:

subjecttocontract said:

If the amount that can go into a cash isa is reduced, I won't be paying more into a S&S isa that's for sure. I'll probably just put it in a fixed rate bond and pay tax on it.......which is most probably where the money already is. I'm in my seventies and dont want any more invested in S&S. I suspect there are many hundreds of thousands with the same idea.

There are extremely low risk investments such as money market funds or short dated gilts available in some S&S accounts. On some eg Dodl it's even possible to get a good rate on a S&S ISA cash balance without making any investment.

As I mentioned above, it would be easy to ban cash-like securities from these types of tax wrappers and it's been done before.

Alexland

wmb194 said:
As I mentioned above, it would be easy to ban cash-like securities from these types of tax wrappers and it's been done before.

Yes and they could force ISA managers to offer 0% interest on cash balances, etc.

Guess it depends on how far they want to go in pointlessly irritating everyone and breaking stuff.

Shylock_249

One thing is pretty obvious is that if Reeves leaves it as it is it won't be a vote looser but if she tinkers with it it almost certainly will be.  Maybe she thinks that anyone who can save 20k a year is NOT gonna vote for the current government anyway.

Growingold

clairec666 said:

Ocelot said:

clairec666 said:

Kim_13 said:

Ruling out cutting the overall £20,000 limit was a silly thing to do, and cutting it anyway would be no big deal - it wasn’t a manifesto commitment to my knowledge. A £20,000 ISA allowance against a £12,570 personal allowance is madness and cutting it would be better than restricting personal choice - and raise more revenue in the process.

If you're putting £20000 into an ISA each year then you're hardly struggling for money, yet by keeping the personal allowance frozen those at the lower end of the pay scale are losing a higher proportion of their income to tax. If Labour stuck to their original ethos, they would be slashing that ISA limit and raising the personal allowance in order to help out lower paid workers. There would be grumbles, but they'd soon go away. It's not as if they're raiding our existing ISAs and taxing us on their contents, they would just be limiting how much we put in. £5000 seems reasonable in my opinion.

I don 't know about you, but my 20k per year isn't 'new' money, it's money recycled from  taxable accounts.

It's still more money than a lot of people have though. I'm not knocking anyone who is working hard and managing to save some of their earnings, but I don't see why people should be able to build up massive ISA pots while those struggling to get by with little savings are paying more and more tax on their earnings. Still, political debate is to be avoided on this forum, so I'll say no more.

Okay some people are really struggling and I really do sympathise with them.  However a lot of people squander their money they could save for a rainy day on frivolous things.  The average household has numerous subscriptions for various things, are these really essential?  A lot of people must have the latest trend.  
And before anyone jumps on me for saying these things I cannot afford to save £20,000 a year in ISA's but I don't resent people who can.  I don't waste my money on unnecessary subscriptions or the latest fad in clothes or electronics.  I save what I can and when I want to treat myself I can.  I know from personal experience what it is like to watch every penny coming in.  Luckily I'm not in that situation now 
If people want to build up massive ISA pots then let them, they've earnt their money and they're free to choose what they spend it on, whether the here and now or the future.
Raising the personal allowance ( I wish they would) would not just benefit the lower earners though everyone would benefit.